Opinions
Gov. Tim Pawlenty is proposing $85 million in tax breaks to create jobs in solar energy, methane gas, and wind energy. According to the governor, we're going to have a whole new manufacturing sector building solar power plants and wind turbines, and his tax breaks will bring those new jobs to Minnesota. Isn't that a good idea?
No. It's a bad idea.
Solar and wind together account for less than 5 percent of the fuel for Minnesota's electrical production. There's a reason for that. They don't work well. Neither solar nor wind currently produce a reliable stream of energy, and they cost more than either coal or nuclear.
But aren't solar and wind the energies of the future? I don't know. Neither does the government.
And that's the point. Politicians can't predict what industry will succeed in the future. In the 1970s, President Carter created the Synthetic Fuels Corporation to market domestically produced synthetic fuels. It failed. More recently, ethanol was going to free us from foreign oil and save the environment. It didn't work. Politicians have a terrible track record of picking economic winners and losers. A lot of it has to do with the backward way government decisions are made.
Politicians get mileage out of doing things whether or not they make any sense. Last summer, when gas prices were high, our own U.S. Rep. Tim Walz said that our high gas prices were the result of a "failure to hold Big Oil accountable." Apparently, oil executives can magically raise the price of gas at will.So now that Rochester gas prices are less than $1.70 a gallon, is Walz going to send the oil companies a gift basket for their kind-hearted lowering of gas prices? Of course not. "Holding Big Oil accountable" is too good a sound byte.
Half our legislation comes from this "will it make a good sound byte?" mentality. The other half is based on very practical, down-and-dirty deal-making that is heavily influenced by special interests. Because of that, our government is most receptive to concerns of a motivated minority, who can impose their will against the best interests of a disinterested majority.
That's why wasteful tax breaks and subsidies don't die. To this day we have a milk subsidy system that pays dairy farmers more the farther they are from Eau Claire, Wis., because in the 1930s, when the law was written, there was no refrigerated transportation.
There are bad ideas in the private sector too, of course. But the difference, is bad ideas in the private sector die. The Edsel, 8-track tapes, New Coke: they all disappeared because they didn't meet the consumers' needs. And their demise freed up people and capital for more productive endeavors. That weeding-out process is a key part of economic growth, and it's why we're not all making horse-and-buggy whips.
In the private sector, the only way outdated or bad ideas survive is if the government steps in and helps them. And when the government does start pushing bad products (like subprime loans) we get a disproportionate amount of money flowing toward things nobody wants. If it goes on long enough, we eventually get massive failures.
Which brings us back to Pawlenty's tax breaks. If solar and wind work, people will choose them. If solar and wind are made to work through subsidies or artificially increasing the price of coal, we'll see new jobs in solar and wind. But we'll see a net decrease in jobs as the government leeches capital from successful businesses that create and permanently sustain their own jobs. Not to mention how many jobs we'll lose when artificially high energy prices drive businesses away. Then some brilliant politician will tell us that if we just bail out the wind industry, everything will be OK.
Here's something free market conservatives and anti-corporate liberals agree on. Government subsidizing business is a bad idea. It doesn't matter whether it's big-government Democrats who subsidize their pet industries or big-government Republicans who give them tax breaks.
The result is the same: inferior products, higher costs, destructive economic bubbles. All paid for by the everyday taxpayer who can't afford a lobbyist.
| < prev | next > |



